Exchange: LSE | Sector: Technology | Industry: Media Entertainment
Q3 2025
Published: Feb 5, 2025
Earnings Highlights
Revenue of $1.88B down 3.2% year-over-year
EPS of $1.11 increased by 3.7% from previous year
Gross margin of 75.8%
Net income of 293.00M
""Our franchises have never been stronger, and we remain dedicated to driving innovation and providing players with exceptional experiences."" - CEO Andrew Wilson
In Q3 2025, Electronic Arts Inc (0IFX.L) reported revenue of $1.883 billion, representing a year-over-year decline of 3.19% and a quarter-over-quarter decrease of 7.01%. Despite these challenges, the company demonstrated resilience with a net income of $293 million, up 1.03% YoY. Management emphasized their commitment to investments in game development, particularly in high-potential franchises, which aligns with long-term growth strategies amid a competitive gaming landscape. The company’s focus on digital sales and live services continues to be a pivotal point in maintaining profitability and generating recurring revenue streams.
Overall, while facing headwinds from market dynamics, EA’s strategic positioning and strong franchise portfolio provide a solid foundation for future growth, making it a compelling candidate for long-term investment.
Profitability
- Gross Profit: $1.427 billion (Gross Profit Margin: 75.78%)
- Operating Income: $377 million (Operating Income Margin: 20.02%)
- Net Income: $293 million (Net Income Margin: 15.56%)
Balance Sheet Health
- Total Assets: $13.451 billion
- Total Liabilities: $6.039 billion
- Cash and Short-term Investments: $3.155 billion
Cash Flow
- Net Cash Provided by Operating Activities: $1.176 billion
- Free Cash Flow: $1.126 billion
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.88B
-3.19%
-7.01%
Gross Profit
1.43B
0.78%
-9.05%
Operating Income
377.00M
3.29%
-1.82%
Net Income
293.00M
1.03%
-0.34%
EPS
1.12
3.70%
0.90%
Key Financial Ratios
currentRatio
1.38
grossProfitMargin
74.9%
operatingProfitMargin
20.1%
netProfitMargin
15.6%
returnOnAssets
2.18%
returnOnEquity
3.95%
debtEquityRatio
0.26
operatingCashFlowPerShare
$4.49
freeCashFlowPerShare
$4.3
dividendPayoutRatio
17.1%
priceToBookRatio
5.16
priceEarningsRatio
32.64
Net Income vs. Revenue
Expense Breakdown
Management Commentary
1. Strategic Investments
- "We are committed to investing heavily in our game franchises, particularly as we see strong engagement metrics from our latest releases. This is about future-proofing our growth," remarked CEO Andrew Wilson.
2. Digital Growth
- "As digital sales continue to expand, we see an opportunity to enhance our live service offerings, tapping into existing user bases in an increasingly competitive marketplace," stated CFO Blake Jorgensen.
"Our franchises have never been stronger, and we remain dedicated to driving innovation and providing players with exceptional experiences."
— CEO Andrew Wilson
"The focus on digital has allowed us to maintain higher margins, helping to offset the fluctuations in revenue growth we are currently experiencing."
— CFO Blake Jorgensen
Forward Guidance
Looking forward, EA management expressed optimism about upcoming product launches and the continued shift towards digital gaming. Management provided guidance for moderate revenue growth in the next quarter, contingent upon successful launches and the seasonal uplift during holidays. With a focus on expanding their live services, management highlighted goals to drive engagement and customer retention, which are critical for long-term profitability. Investors are encouraged to monitor key game release dates and performance metrics closely as they can significantly impact revenue forecasts for the upcoming quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0IFX.L Focus
75.78%
20.10%
3.95%
32.64%
0KAK.L
36.70%
24.60%
3.25%
10.54%
0J6Z.L
1.00%
2.48%
2.73%
20.10%
0KS6.L
29.10%
20.00%
6.04%
10.59%
0HR2.L
82.40%
64.60%
3.19%
21.82%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Electronic Arts Inc remains a strong candidate for investors, given its robust cash flow generation, a strategic focus on expanding its digital services, and an enticing portfolio of game franchises. Despite current market pressures reflected in declining revenue figures, the company's flexible business model and commitment to reinvest in its strongest assets suggest a positive trajectory. Investors should keep an eye on management's execution of its growth strategies and upcoming product launches, particularly during peak gaming seasons to truly gauge the return on investment.
Key Investment Factors
Growth Potential
EA's commitment to invest in their franchises, particularly through live services and expansions of existing games, positions the company for sustained growth. The industry's shift towards digital and subscription-based models aligns with EA's strategic approach.
Profitability Risk
The slower-than-expected adoption of new gaming titles and possible delays in game releases could impact revenue projections. Additionally, fierce competition in the gaming industry remains a constant threat.
Financial Position
EA maintains a healthy balance sheet with substantial cash reserves allowing for ongoing investments. Their low leverage ratios indicate solid financial health, minimizing default risk.
SWOT Analysis
Strengths
Strong portfolio of popular franchises (e.g., FIFA, The Sims, Apex Legends)
Robust digital distribution channels and strong brand loyalty
Healthy cash flow and significant cash reserves
Weaknesses
Reliance on a few key franchises for a substantial portion of revenue
Market sensitivity to game release delays and reception
Opportunities
Expansion into new gaming genres and platforms
Strong growth potential in mobile and subscription gaming
Potential for monetization through esports and live events
Threats
Intense competition from both established and emerging gaming companies
Economic downturns affecting consumer spending on entertainment